1. Прочитайте следующий текст и найдите ключевые слова и предложения (фрагменты):
Every time one of the world’s currencies plunges, policy-makers start to wonder aloud whether anything can be done to prevent a repeat performance. The recent fall in the dollar has proved no exception. The president of the European Commission, and various French politicians are among those who have called for a revival of international exchange-rate agreements. Such calls have rekindled a long-running debate among economists about the relative merits of fixed and floating exchange-rate systems.
The beauty of a floating-rate system is that it allows a country to adjust monetary policy without worrying about the exchange rate. Provided that domestic wages and prices do not immediately adjust to offset any exchange-rate move, it also allows them to respond to an external shock, such as an oil-price rise, through a change in the exchange rate rather than a more painful domestic adjustment.
There are two snags, however. Floating exchange rates can be highly volatile. This can cause price instability that harms prospects for trade and investment. Under a floating-rate system a government may also be tempted to pursue an excessively loose monetary policy, which results in higher inflation. Fixed-exchange regimes avoid botn of these problems; but at the cost of making it harder for countries to adjust to external shocks.
Ideally, governments would like the best of both worlds - currency stability, but also the ability to adjust exchange rates if absolutely necessary. Barry Eichengreen, an economist at the University of California, Berkeley, suggests that the success of any managed exchange-rate regime that seeks to deliver this combination will depend on three tests. It must be flexible enough to cope with economic shocks. It must be robust enough to convince the markets that governments are committed to defending their pegged rates in all but the most exceptional circumstances. And it must be able to see off speculators who decide to put this commitment to the test.
Some previous managed exchange-rate systems have more or less done all this. Under the classic gold standard, for instance, countries suspended convertibility if their economies ran into serious trouble. Under the Bretton Woods system of fixed-but-adjustable exchange rates, winch ended in 1971, the International Monetary Fund provided liquidity to help countries maintain their exchange-rate peg. In circumstances or “rundamental disequilibrium”, however, they were allowed to devalue. The early years of the Uropean exchange-rate mechanism (ERM) also passed the tests.
But in future similar regimes will find it harder. Political pressure to use the exchange rate to cope with economic shocks will undermine a pegged system’s credibility, tempting speculators to attack it. And he suggests that greater capital mobility will make it increasingly difficult for countries to defend target parities against speculators.
That may not stop politicians from trying. Among other things, they can raise interest rates, reimpose capital controls or call for foreign support to prop up their currencies. But this will not be enough. Financial innovations such as derivatives and increased cross-border investment will make capital controls all but impossible to enforce. Raising interest rates to defend a currency is often politically unpopular - and, in debt-laden countries, may be counter-productive because it increases debt-interest costs. Nor can any country count on unlimited intervention by others to support its currency.
Any system based on explicit exchange-rate targeting is doomed. The only options are a floating-rate system or monetary unification. This does not mean that countries cannot manage their floating rates by intervening in currency markets; but it does mean that they should not target specific rates. There is evidence to support this view: fewer countries now peg their exchange rates than a decade ago and the ERM, having shed both the pound sterling and the Italian lira, has had to broaden its target ranges.
Do you want to be in my band?
Other economists disagree. They think that exchange-rate systems can be designed to cope with market pressures, and still provide more stability than floating rates. One much-discussed proposal has been put forward by John Williamson of the Institute for International Economics in Washington, DC. He suggests that countries could pre-announce bands for their real exchange rates, specifying a central rate with a 10% margin on either side. Governments would try to keep their nominal exchange rates within this zone. If necessary, rates could be realigned before the limits were reached. Faced with an “unwarranted” speculative attack, a country could temporarily suspend its commitment.
Such a system would retain some flexibilily, white being more stable than managed floating. However if the bands were always moved before they were tested, target zones would be little different from managed floating. If they were not, the system would suffer from the same problems as fixed-rate regimes. At the margin, the practical difference between the two systems may be small. But the success of either will depend, as any exchange-rate system must, on whether governments will allow the exchange rate to be a big factor in setting domestic policies.
VOCABULARY
| 1. to plunge | резко снижаться (о курсе валют) |
| 2. floating exchange-rate-system | система плавающих валютных курсов |
| 3. to adjust exchange-rates | корректировать, изменять валютные курсы |
| 4. flexible | гибкий, способный изменяться (о валютном курсе) |
| 5. robust | зд. Устойчивый |
| 6. pegged rates | «привязанные» курсы, т.е. привязка курса валюты к какому-либо ориентиру (например, другой валюте) |
| 7. managed exchange-rate-system | система управляемых валютных курсов |
| 8. «fundamental disequilibrium» | валютный курс при отсутствии «фунда-ментального равновесия» |
| 9. target parities | намеченный паритет валют |
| 10. derivatives | производные финансовые инструменты (фьючерсы, опционы и т.д.) |
| 11. debt-interest costs | расходы, связанные с погашением и обслуживанием долга |
| 12. targeting | таргетирование, т.е. установление ориенти-ров (роста) |
| 13. band (s) | предел(ы) колебаний валютных курсов |
| 14. margin | зд. разница между курсами валют |
| 15. to realign (central rates) | пересмотреть (центральные курсы валют) |
| 16. to be tested | зд. приближаться к предельному уровню (о валютном курсе) |
2. Переведите отрывок «Do you want to be in my band ?».
3. Напишите реферат и аннотацию данного текста.
«Financial Markets».
Topics for discussion
1. The world’s financial markets grow more integrated.
2. Closer world integration may hurt profits of financial intermediaries.
3. South-East Asian markets have always been like a warrant to the world stock market: they go up more and they go down more.
4. International coordination over exchange rates may help to avoid the world’s currencies plunges.
5. Financial innovations and increased cross-border investment make capital controls all but impossible to enforce.
UNIT IX. BANKS AND BANKING SAVING.
1. Дайте ответы на следующие 1. Is banking a risky business ?
вопросы без предварительного 2. Are the consequences of a «systemic
чтения текста: collapse» of the world banks liable to
be bigger now than in the recent past ?
3. Do small savers prize safety above all
else ?
2. Дайте ответы на следующие 1. Why do most people assume that
вопросы без предварительного banking is nowadays under control ?
чтения текста: 2. Are banks taking greater risks than
they used to ?
3. What is «narrow» banking ?
4. Does «narrow» banking have its critics?
3. Прочитайте следующий текст и найдите ключевые слова и предложения в каждом абзаце:
HOW SAFE IS YOUR BANK ?
Banking is boring - except to its practitioners, and except when it goes wrong. Most people remember vaguely that a banking crisis helped tip the world into the Great Depression of the 1930s, with all its horrifying consequences for the second half of the century. But most people also assume that banking is nowadays under control, with the danger of failures, panics and runs abolished by careful regulation and the widespread system of deposit insurance. This assumption is, alas, wrong. If anything, the world’s banking system may be becoming even more dangerous than it used to be, and the need for a thorough reform even more urgent.
There has as yet been no other “systemic” collapse on the scale of the 1930s. But failures, panics and runs continue to haunt the world’s banks. They are common in the developing world, but not confined to it. It is, after all, not even a decade since rescuing their mortgage-lending “thrifts” cost America’s taxpayers a decidedly unboring $150 billion. In Japan, the fate of seven ailing mortgage lenders has put a cloud over the country’s banks - and the cost of rescuing the lenders has become one of the central issues in Japan’s politics. A systemic collapse, though maybe less likely than in the recent past, is by no means impossible. And if one did occur, its consequences, both for the world’s financial systems and the broader economy, are liable to be bigger.
Risky business
Why? One reason is that banks are taking greater risks than they used to. Having lost ground in their traditional business of taking deposits (many savers now prefer a mutual fund) and lending at interest (most big firms now go straight to the capital markets), they earn a larger proportion of their income from the volatile trading business. At the same time, they are becoming bigger. For example the formation of two vast new banking groups. In Japan, Mitsubishi Bank and Bank of Tokyo joined forces to become the world’s biggest bank, with ¥75 trillion ($700 billion) of assets. On the same day Chase Manhattan and Chemical Bank sealed America’s biggest-ever banking marriage.
In principle, bigger banks might be safer ones. With more capital, they should be better able to withstand financial shocks, and more willing to splash out on sophisticated risk-management systems. But neither size nor systems guarantee that banks will kick their habit of messing things up from time to time. Barings claimed to have a state-of-the-art system for managing risk. Nonetheless, this venerable British merchant bank was eviscerated by the unhedged bets of a single trader. Although Japan contains nine of the world’s ten biggest banks, its government has had to maintain confidence by promising that none of its top banks will be allowed to fail.
Barings was at least small enough for the Bank of England to stand aside and let it sink. It is doubtful whether banking regulators could confidently do the same with any of the new megabanks. It is at least possible that these would be considered “too big to fail”. Governments would rightly wonder whether the abrupt felling of any one of them might pose a general threat to the financial system, either by triggering a domino-like run on other banks, or by causing a sudden loss of liquidity in national payments systems. The potential damage that such a disaster could cause has risen dramatically in recent years, as banks’ exposure to one another has soared.